This paper computes a quality adjusted price index for the personal computer CPU from 1996 to 2000. The index is based on the pure characteristics demand model. I first compute the quality adjusted price index for the whole market, and show that it is very comparable with the hedonic price index...

In this paper I consider a new discrete choice model of differentiated product demand that combines the pure characteristics demand model and the random coefficient logit demand model. In this hybrid model consumers are exposed to an idiosyncratic taste shock when they make a brand choice but...